Intelligent Buildings and the Enterprise

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A high-growth investment strategy at the intersection of the IT and Energy industries. Details on the Navitas approach to cleantech investing, along with a description of current market drivers and profiles of a number of innovative startups in the Intelligent Buildings and enterprise software industries.

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Intelligent Buildings and the Enterprise

  1. 1. JANUARY 2014 INTELLIGENT BUILDINGS & ENTERPRISE A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY
  2. 2. ABOUT THE AUTHOR NAVITAS CAPITAL IS A VENTURE CAPITAL FIRM AT THE INTERSECTION OF THE IT AND ENERGY SECTORS WITH A UNIQUE FOCUS ON THE INTELLIGENT BUILDINGS & ENTERPRISE SPACE. OUR MISSION IS TO IDENTIFY, INVEST IN, AND HELP BUILD THE NEXT GENERATION OF DEFINING COMPANIES IN OUR SPACE. WE WOULD LIKE TO THANK THE INCREDIBLE FOUNDERS AND LEADERS FROM OUR PORTFOLIO COMPANIES FOR GIVING US THEIR FEEDBACK ON THIS REPORT AND HELPING US PULL THE CASE STUDIES TOGETHER. SPECIAL THANKS GOES OUT TO ADAM STEIN AND TOM ARNOLD FROM GRIDIUM, RAO MULPURI AND ERIC KLAWUHN FROM VIEW, RYAN SUTTON-GEE AND TRACY YOUNG FROM PLANGRID, MATT FREY AND MARTY HESS FROM OPTIMUM ENERGY AND SIMON LEBLOND FROM SCL ELEMENTS. THANK YOU. NORTHERN CALIFORNIA AUTHORS: 1751 Harbor Bay Parkway, Suite 200 Jim Pettit Alameda, CA 94502 Navitas Capital SOUTHERN CALIFORNIA Travis Putnam 11990 San Vicente Blvd., Suite 350 Navitas Capital Los Angeles, CA 90049 William Busch www.navitascap.com © 2014 NAVITAS CAPITAL. ALL RIGHTS RESERVED. Navitas Capital
  3. 3. CONTENTS INTRODUCTION _________________________________________________________ 2 NAVITAS INVESTMENT THESIS ______________________________________________ 4 MARKET & GROWTH DRIVERS _______________________________________________ 5 TECHNOLOGY ENABLERS __________________________________________________ 9 CHALLENGES TO DRIVING INVESTMENT RETURNS ________________________________ 13 CONCLUSION __________________________________________________________18 APPENDIX A: CASE STUDIES ________________________________________________ 19 GRIDIUM ___________________________________________________________ 19 VIEW ____________________________________________________________ 22 PLANGRID _________________________________________________________ 25 OPTIMUM ENERGY ___________________________________________________ 28 SCL ELEMENTS ______________________________________________________ 31 APPENDIX B: 50 INTELLIGENT BUILDINGS & ENTERPRISE STARTUPS TO WATCH ___________ 34 1
  4. 4. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY INTRODUCTION 2
  5. 5. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY 3
  6. 6. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY NAVITAS INVESTMENT THESIS 4
  7. 7. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY MARKET & GROWTH DRIV ERS o SIZE & IMPACT o o o o o o o o o 5 INTELLIGENT BUILDINGS & ENTERPRISE GROWTH DRIVERS
  8. 8. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY PROVEN TECHNOLOGIES & AFFORDABLE COST POINTS BUILDING ENERGY CODES IT DRIVING REAL-TIME UNDERSTANDING OF BUILDINGS 6
  9. 9. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY GREEN BUILDING MOVEMENT ENERGY VOLATILITY & RELIABILITY ENERGY EFFICIENCY FINANCING SOLUTIONS 7
  10. 10. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY INCREASED EDUCATION & ENERGY EFFICIENCY AWARENESS CORPORATE SUSTAINABILITY INITIATIVES UTILITY DEMAND SIDE MANAGEMENT PROGRAMS 8
  11. 11. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY TECHNOLOGY ENABLERS o o INTERNET OF THINGS o MOBILE o SOCIAL BUSINESS o 9 CLOUD AND BIG DATA 3D MODELING/IMAGING CLOUD AND BIG DATA
  12. 12. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY INTERNET OF THINGS SOCIAL BUSINESS MOBILE 10
  13. 13. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY 3D MODELING/IMAGING “Beyond BIM as we know it today, we believe there will be a new generation of exciting 3D imaging and analytical modeling technologies that will make a big difference in the facility’s long-term health and management.” 11
  14. 14. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY THE “SMART BUILDING” 12
  15. 15. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY CHALLENGES TO DRIVING INVESTMENT RETURNS COMPETING VS. PARTNE RING WITH LARGE CORPORATE PLAYERS SCALABILITY 13
  16. 16. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY REAL BUSINESS METRICS” METRICS VS. “VANIT Y GETTING THE BUSINESS MODEL RIGHT CAPITAL INTENSITY REQUIREMENTS OF FINANCING WHAT WE LOOK FOR & K EYS TO SUCCESS 14
  17. 17. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY WORLD-CLASS TEAMS TABLE 1 OPTIMUM ENERGY: ROI & PAYBACK CASE STUDY OPTIMUM ENERGY CUSTOMER – NEW YORK PREDICTED ANNUAL SAVINGS: ACTUAL 1ST YEAR SAVINGS: > 1,662,000 KWH PER YEAR > 1,725,000 KWH PER YEAR > $174,500/YR. > $180,820/YR. > 15.4% SAVINGS > 17% SAVINGS > $506K COST > $506K COST WITH A $100K REBATE > 2.9 YEAR PAYBACK + 34% IRR > 2.8 YEAR PAYBACK + 35% IRR 15 SCALABLE GO-TO-MARKET STRATEGY
  18. 18. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY “CAPITAL LIGHT” APPROACH HIGH GROSS MARGINS FLEXIBLE BUSINESS MODELS INTELLIGENT IP STRATEGY 16 “Generally speaking (there are always exceptions to the rule), we believe funding startups with limited amounts of capital to demonstrate product-market fit and a compelling growth story is a better venture capital investment strategy, particularly for Navitas Capital, which is not conflicted by large VC politics (e.g. the propensity to overcapitalize a startup in an attempt to “move the return needle” of an investment bet in a big fund.)”
  19. 19. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY TABLE 2 17
  20. 20. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY CONCLUSION 18
  21. 21. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY APPENDIX A: CASE STUDIES GRIDIUM, INC. BUSINESS OVERVIEW THEME(S) BUSINESS MODEL PRODUCT(S) GO-TO-MARKET STRATEGY CUSTOMER TRACTION CAPITAL RAISED BUSINESS OPPORTUNITY 19
  22. 22. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY PRODUCTS & SOLUTIONS CUSTOMER VALUE PROPOSITION KEYS TO SUCCESS CAPITAL EFFICIENCY HIGH GROSS MARGINS CHANNEL PARTNERSHIPS 20
  23. 23. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY STRONG FOUNDING TEAM CONCLUSIONS O O O 21
  24. 24. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY VIEW, INC. BUSINESS OVERVIEW THEME(S) BUSINESS MODEL PRODUCT(S) GO-TO-MARKET STRATEGY CUSTOMER TRACTION CAPITAL RAISED BUSINESS OPPORTUNITY 22
  25. 25. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY PRODUCTS & SOLUTIONS CUSTOMER VALUE PROPOSITION o o o o 23
  26. 26. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY KEYS TO SUCCESS GO-TOMARKET STRATEGY IP STRATEGY WORLD-CLASS TEAM CONCLUSIONS O O 24
  27. 27. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY PLANGRID BUSINESS OVERVIEW tools . THEME(S) BUSINESS MODEL PRODUCT(S) GO-TO-MARKET STRATEGY CUSTOMER TRACTION CAPITAL RAISED BUSINESS OPPORTUNITY 25
  28. 28. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY PRODUCTS & SOLUTIONS CUSTOMER VALUE PROPOSITION o o o o KEYS TO SUCCESS CAPITAL EFFICIENCY HIGH GROSS MARGINS STRONG FOUNDING TEAM GO-TO-MARKET STRATEGY 26
  29. 29. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY CONCLUSIONS O PlanGrid was able to deliver its first product into its customer’s hands on a very thin budget, thus establishing “product-market-fit” without burning through large amounts of capital. Capital efficiency creates a healthy scenario for founders and early investors. O From a platform standpoint PlanGrid has clearly benefitted initially from the “halo” effect of Apple and its iPad product, creating a very trusted and highly innovative platform in the construction sector, from which to launch its workflow management solutions. While early, PlanGrid has had strong success in selling directly to tier-1 general contractors to gain a critical mass of market acceptance and credibility by all relevant constituents. Clearly, the scalable, “viral” opportunity is to build a standardized field platform that is trusted in the construction space, broadly accepted by general contractors, subcontractors, engineers, architects and owners. O PlanGrid’s co-founding team is well balanced (industry domain expertise, and technically strong) and thrives working in an extremely fast-paced environment. This has proven to be a powerful recipe as the team has been able to deliver product to customers early in the development cycle, get feedback, and continuously update the software with new features. In addition to the founding team, PlanGrid benefitted from the technical, business, and investor networks of its early investors and advisors, including the Y Combinator incubation program. 27
  30. 30. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY OPTIMUM ENERGY, LLC BUSINESS OVERVIEW THEME(S) BUSINESS MODEL PRODUCT(S) GO-TO-MARKET STRATEGY CUSTOMER TRACTION CAPITAL RAISED BUSINESS OPPORTUNITY PRODUCTS & SOLUTIONS 28
  31. 31. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY CUSTOMER VALUE PROPOSITION o o o o KEYS TO SUCCESS GO-TO-MARKET STRATEGY BUSINESS MODEL IP STRATEGY WORLD-CLASS TEAM 29
  32. 32. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY CONCLUSIONS O O 30
  33. 33. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY SCL ELEMENTS INC. BUSINESS OVERVIEW THEME(S) BUSINESS MODEL PRODUCT(S) GO-TO-MARKET STRATEGY CUSTOMER TRACTION CAPITAL RAISED EXIT BUSINESS OPPORTUNITY 31
  34. 34. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY PRODUCTS & SOLUTIONS CUSTOMER VALUE PROPOSITION o o o o o o KEYS TO SUCCESS “CAPITAL LIGHT” APPROACH GO-TO-MARKET STRATEGY STRONG IP STRATEGY 32
  35. 35. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY STRONG TEAM CONCLUSIONS O O O 33
  36. 36. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY APPENDIX B : 50 INTELLIGENT BUILDING S & ENTERPRISE STARTUPS TO WATCH 34
  37. 37. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY 35
  38. 38. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY 36
  39. 39. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY 37
  40. 40. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY 38
  41. 41. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY 39
  42. 42. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY 40
  43. 43. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY 41
  44. 44. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY 
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  45. 45. INTELLIGENT BUILDINGS & ENTERPRISE: A HIGH-GROWTH INVESTMENT STRATEGY AT THE INTERSECTION OF IT AND ENERGY 43

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